Smith, who helped guide the All Blacks to back-to-back World Cup triumphs in 2011 and 2015, said he plans to take a break from the game.
"It's unbelievable to think that I've been involved in playing and coaching with the All Blacks for 20 years, a third of my life," he said in a statement.
"I've had an incredible time and shared in some fantastic experiences. But it's time to hang up my coach's whistle for a while, take a bit of a hiatus, freshen up and spend some more time with my wife Trish and our family."
This year's Rugby Championship begins in August and ends in October.
"Smithy has been a major contributor to not only New Zealand Rugby but also world rugby," All Blacks coach Steve Hansen added. "Wayne has been such a wonderful ambassador for our game and our country as well.
"I knew it was time to let him finish when he asked my wife to convince me to stop pressuring him into re-signing.
"It's with sadness that we let him go, but it's also with the confidence of knowing that he has left an everlasting legacy."
(Reporting by Toby Davis; Editing by Greg Stutchbury)
